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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Albion Technology & General Vct Plc | LSE:AATG | London | Ordinary Share | GB0005581672 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 69.00 | 67.50 | 70.50 | 69.00 | 69.00 | 69.00 | 3,778 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | -2.85M | -6.3M | -0.0354 | -19.49 | 122.68M |
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TIDMAATG
Albion Technology & General VCT PLC
LEI number: 213800TKJUY376H3KN16
As required by the UK Listing Authority's Disclosure Guidance and
Transparency Rules 4.1 and 6.3, Albion Technology & General VCT PLC
today makes public its information relating to the Annual Report and
Financial Statements for the year ended 31 December 2018.
This announcement was approved for release by the Board of Directors on
22 March 2019.
This announcement has not been audited.
The Annual Report and Financial Statements for the year ended 31
December 2018 (which have been audited), will shortly be sent to
shareholders. Copies of the full Annual Report and Financial Statements
will be shown via the Albion Capital Group LLP website by clicking
https://www.globenewswire.com/Tracker?data=wylr7tf3AVAQnhHkFD1MXmYUss09-hJwJus6kGd72mKS_Rbgc97k4GZWjR6QovDpDkYH0uLjk3t48LBvUiQZ-itpiCBby_eoCZsnUXqwLqLgCwkFPZZw9nc1HFd8gidwLZUdu_tic4LcVazUMYR41YhqFjHZrpURdFBuYNXXGzc=
www.albion.capital/funds/AATG/31Dec18.pdf. The information contained in
the Annual Report and Financial Statements will include information as
required by the Disclosure Guidance and Transparency Rules, including
Rule 4.1.
Investment objective and policy
The Company's investment objective is to provide investors with a
regular and predictable source of dividend income, combined with the
prospect of long-term capital growth, through a balanced portfolio of
unquoted growth and technology businesses in a qualifying venture
capital trust.
Investment policy
The Company will invest in a broad portfolio of unquoted growth and
technology businesses. Allocation of assets will be determined by the
investment opportunities which become available but efforts will be made
to ensure that the portfolio is diversified in terms of sectors and
stages of maturity of portfolio companies.
VCT qualifying and non-qualifying investments
Application of the investment policy is designed to ensure that the
Company continues to qualify and is approved as a VCT by HM Revenue and
Customs ("VCT regulations"). The maximum amount invested in any one
company is limited to any HMRC annual investment limits. It is intended
that normally at least 80 per cent. of the Company's funds will be
invested in VCT qualifying investments. The VCT regulations also have an
impact on the type of investments and qualifying sectors in which the
Company can make investment.
Funds held prior to investing in VCT qualifying assets or for liquidity
purposes will be held as cash on deposit, invested in floating rate
notes or similar instruments with banks or other financial institutions
with high credit ratings or invested in liquid open-ended equity funds
providing income and capital equity exposure (where it is considered
economic to do so). Investment in such open-ended equity funds will not
exceed 7.5 per cent. of the Company's assets at the time of investment.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within
VCT qualifying industry sectors using a mixture of securities. The
maximum the Company will invest in a single company is 15 per cent. of
the Company's assets at cost at the time of investment. The value of an
individual investment is expected to increase over time as a result of
trading progress and a continuous assessment is made of investments'
suitability for sale. It is possible that individual holdings may grow
in value to a point where they represent a significantly higher
proportion of total assets prior to a realisation opportunity being
available.
Borrowing powers
The Company's maximum exposure in relation to gearing is restricted to
10 per cent. of the adjusted share capital and reserves. The Directors
do not have any intention of utilising long-term gearing.
Background to the Company
The Company is a venture capital trust which raised GBP14.3 million in
December 2000 and 2002, and raised a further GBP35.0 million during 2006
through the launch of a C share issue. The Company has raised a further
GBP32.2 million under the Albion VCTs Top Up Offers since January 2011.
On 15 November 2013, the Company acquired the assets and liabilities of
Albion Income & Growth VCT PLC ("Income & Growth") in exchange for new
shares in the Company ("the Merger") resulting in a further GBP28.1
million of net assets.
Financial calendar
Annual General Meeting 11.00 am on 4 June 2019
Record date for first dividend 7 June 2019
Payment of first dividend 28 June 2019
Announcement of half-yearly results for the six months September 2019
ending 30 June 2019
Payment of second dividend (subject to Board approval) 31 December 2019
Financial highlights
176.4p Total shareholder return per Ordinary share since
launch
-----------------------------------------------------
9.5p Total return per share for the year ended 31 December
2018 (13.2% on opening net asset value per share)
-----------------------------------------------------
4.0p Total tax free dividend per Ordinary share paid in
the year to 31 December 2018
-----------------------------------------------------
77.4p Net asset value per Ordinary share as at 31 December
2018
-----------------------------------------------------
2.75% Ongoing charges ratio for the year ended 31 December
2018
-----------------------------------------------------
31 December 2018 31 December 2017
(pence per share) (pence per share)
Opening net asset value 71.9 71.6
Revenue return 0.4 0.2
Capital return 9.1 4.1
------------------ ------------------
Total return 9.5 4.3
Dividends paid (4.0) (4.0)
------------------ ------------------
Net asset value 77.4 71.9
------------------------ ------------------ ------------------
Total
shareholder
return to 31
December Ordinary share C share Income & Growth
2018 (pence per share) (pence per share) (1) (pence per share) (2)
------------ ------------------ ---------------------- ----------------------
Total
dividends
paid during
the year
ended:
31 December
2001 1.0 - -
31 December
2002 2.0 - -
31 December
2003 1.5 - -
31 December
2004 7.5 - -
31 December
2005 9.0 - 0.6
31 December
2006 8.0 0.5 2.6
31 December
2007 8.0 2.5 3.5
31 December
2008 16.0 4.5 3.5
31 December
2009 - 1.0 3.0
31 December
2010 8.0 3.0 3.0
31 December
2011 5.0 3.8 3.5
31 December
2012 5.0 3.9 3.5
31 December
2013 5.0 3.9 3.5
31 December
2014 5.0 3.9 3.9
31 December
2015 5.0 3.9 3.9
31 December
2016 5.0 3.9 3.9
31 December
2017 4.0 3.1 3.1
31 December
2018 4.0 3.1 3.1
Total
dividends
paid to 31
December
2018 99.0 41.1 44.7
Net asset
value as at
31 December
2018 77.4 60.2 60.5
------------------ ---------------------- ----------------------
Total
shareholder
return to
31 December
2018 176.4 101.3 105.2
------------------ ---------------------- ----------------------
In addition to the dividends summarised above, the Board has declared a
first dividend for the year ending 31 December 2019 of 2.0 pence per
share to be paid on 28 June 2019 to shareholders on the register on 7
June 2019.
Notes
Total shareholder return for every 100 pence invested on initial
allotment. The table above excludes tax benefits upon subscription.
(1) The C shares were converted into Ordinary shares on 31 March 2011.
The net asset value per share and all dividends paid subsequent to the
conversion of the C shares to the Ordinary shares are multiplied by the
conversion factor of 0.7779 in respect of the C shares' return, in order
to give an accurate picture of the shareholder value since launch
relating to the C shares.
(2) Albion Income & Growth VCT PLC was merged with Albion Technology &
General VCT PLC on 15 November 2013. The net asset value per share and
all dividends paid subsequent to the merger of the Income & Growth
shares to the Ordinary shares are multiplied by the issue ratio of
0.7813 in respect of the Income & Growth shares' return, in order to
give an accurate picture of the shareholder value since launch relating
to the Income & Growth shares. Prior to the merger, Albion Income &
Growth VCT PLC had a financial year end of 30 September and as such, the
above dividends per share relate to the relevant period.
Chairman's statement
Introduction
I am pleased to report the results for Albion Technology & General VCT
PLC for the year to 31 December 2018. These show a total return of 9.5
pence per share, which is a 13.2 per cent. return on the opening net
asset value per share and is excellent progress after a period of
divestment under the recovery plan of the last three years.
Investment portfolio
The results for the year showed net gains on investments of just over
GBP10.7 million, against gains of GBP5.1 million for the previous year.
The key elements within this included sharp rises in the values of
Quantexa, Mirada, G. Network Communications and Egress Software
Technologies as their businesses grow, and a rise in the valuation of
Radnor House School, following a third party valuation. In addition,
they reflected the successful sale of Grapeshot, a digital marketing
business, which was sold for around ten times original cost. Against
this, the share price of the AIM-quoted Mi-Pay fell during the period,
while slow trading at memsstar contributed to write-downs.
During the year, a total of GBP4.4 million was deployed into portfolio
companies, of which GBP1.4 million was invested across seven new
portfolio companies, all of which are likely to require further
investment as the companies prove themselves and grow:
-- Phrasee, which uses artificial intelligence to generate language for
optimised marketing campaigns;
-- Arecor, a biopharmaceuticals business specialising in diabetes care;
-- Koru Kids, a provider of an online marketplace connecting parents and
childcare;
-- uMotif, which has developed patient engagement and data capture software
for use in clinical trials and patient support programmes;
-- Forward Clinical, a provider of secure mobile messaging services for
doctors and care workers;
-- ePatient Network (trading as Raremark), a patient engagement and data
business focused on rare diseases; and
-- Healios, which provides online delivery of mental health therapy
services.
A further GBP3.0 million was invested in existing portfolio companies,
including GBP540,000 in Locum's Nest, GBP438,000 in Quantexa and
GBP309,000 in Panaseer. We are also pleased to report that The Evewell
(Harley Street), an operator of a women's health centre focusing on
fertility, opened during the year.
In addition to the sale of Grapeshot, referred to above, we had a number
of realisations during the year, including our holdings in sparesFinder,
Infinite Ventures (Goathill) and CSS Group. Further details can be found
in the realisations table on page 20 of the full Annual Report and
Financial Statements.
Overall, 54 per cent. of the portfolio by value is profitable, measured
by earnings before interest, depreciation and tax, with a number of our
investments showing strong growth in fast-developing international
markets.
Results and dividends
As at 31 December 2018, the net asset value was 77.4 pence per share
compared to 71.9 pence per share at 31 December 2017. The total return
after tax was GBP9.8 million compared to GBP4.2 million in the year to
31 December 2017.
The Company paid dividends totalling 4.0 pence per share during the year
ended 31 December 2018 (2017: 4.0 pence per share). The dividend
objective of the Board is to provide shareholders with a strong,
predictable dividend flow. The Company will target an annual dividend of
4.0 pence per share for the year ending 31 December 2019, and has
declared a first dividend for the year ending 31 December 2019 of 2.0
pence per share to be paid on 28 June 2019 to shareholders on the
register on 7 June 2019. Subject to Board approval, a further dividend
for the year ending 31 December 2019 will be paid in December 2019.
Annual General Meeting
Shareholders' views are regarded highly and the Board encourages
shareholders' to vote on the resolutions within the Notice of Annual
General Meeting on page 65 of the full Annual Report and Financial
Statements using the proxy form enclosed with the Annual Report and
Financial Statements, or electronically at
https://www.globenewswire.com/Tracker?data=wylr7tf3AVAQnhHkFD1MXkwTcNRyg6LMiopm8_K1U5uPkkDNsv1UGPsrjUXsIXXdqOThHg65_8ZoFrJMyIBOEqN6hcwzbF8ymLzcFGs1a_SPvCKFoOSyWnJm3krkMVY5
www.investorcentre.co.uk/eproxy. The Board considers carefully the
business to be approved at the Annual General Meeting and unanimously
recommends voting in favour of all the resolutions being proposed.
Risks and uncertainties
Other than investment performance through stock selection, the key risks
facing the Company are from broader economic factors, including changes
to VCT rules. The outlook for the UK and global economies continues to
be the key risk affecting the Company, and the withdrawal of the UK from
the European Union is likely to have an impact on the Company and its
investments, although it is difficult to quantify it at this time. The
Manager has performed an assessment on a portfolio company basis to
assess exposure to Europe, and appropriate actions, where possible, have
been implemented.
The Manager has a clear focus to allocate resources to those sectors and
opportunities where it believes growth can be both resilient and
sustainable. However, the new VCT rules will result in the gradual
reduction of the asset-based element of the portfolio in favour of
growth and technology companies which will inevitably increase
volatility over time.
A detailed analysis of the other principal risks and uncertainties
facing the business is shown in the Strategic report below.
Share buy-backs
It remains the Board's primary objective to maintain sufficient
resources for investment in new and existing portfolio companies and for
the continued payment of dividends to shareholders. The Board's policy
is to buy back shares in the market, subject to the overall constraint
that such purchases are in the Company's interest. It is the Board's
intention for such buy-backs to be in the region of a 5 per cent.
discount to net asset value, so far as market conditions and liquidity
permit. The Board continues to review the use of buy-backs and is
satisfied that it is an important means of providing market liquidity
for shareholders.
Transactions with the Manager
Details of transactions that took place with the Manager during the year
can be found in note 5 and principally relate to the investment
management fee. As a result of the lowering of the expenses cap in 2015
to 2.75 per cent. of net assets, the investment management fee was
reduced by GBP136,000 in the year (2017: GBP137,000). Additionally,
Albion agreed to reduce that proportion of its management fee relating
to the investment in the SVS Albion OLIM UK Equity Income Fund ("OUEIF")
by 0.75 per cent. per annum, which represents the management fee charged
by OLIM. This avoids double counting of fees and resulted in a further
reduction of the management fee of GBP15,000 (2017:GBP3,000). Further
details on the investments in the OUEIF can be found in note 20.
Albion VCTs Prospectus Top Up Offers
Your Board, in conjunction with the boards of other VCTs managed by
Albion Capital Group LLP, launched a prospectus top up offer of new
Ordinary shares on 7 January 2019. A Securities Note, which forms part
of the Prospectus, was sent to shareholders. The proceeds of the Offer
will be used to provide further resources at a time when a number of
attractive investment opportunities are being seen.
The funds raised by the Company pursuant to the Offer will be added to
the liquid resources available for investment, putting the Company into
a position to take advantage of investment opportunities over the next
two to three years. The proceeds of the Offer will be applied in
accordance with the Company's investment policy. The Company continues
to participate in the Top Up Offers and also benefits from receipts from
dividend reinvestment, the net proceeds of which are invested in new
investment opportunities and to provide additional working capital in
the Company. It is important that the Company continues to have cash
available for future investments and the Top Up Offers and dividend
reinvestments are important sources of that capital.
Outlook and prospects
It is encouraging to see strong performance returning to the Company.
The portfolio remains well balanced, despite its exposure to an
increasing number of early stage technology businesses. However, the
portfolio's ability to grow and add value is shown by a number of our
more mature technology investments, whose prospects lead us to look
forward to the future with cautious optimism despite a less than
propitious and uncertain economic backdrop.
Dr. N E Cross
Chairman
22 March 2019
Strategic report
Investment objective and policy
The Company's investment objective is to provide investors with a
regular and predictable source of dividend income, combined with the
prospect of long-term capital growth, through a balanced portfolio of
unquoted growth and technology businesses in a qualifying venture
capital trust.
The Company will invest in a broad portfolio of unquoted growth and
technology businesses. Allocation of assets will be determined by the
investment opportunities which become available but efforts will be made
to ensure that the portfolio is diversified in terms of sectors and
stages of maturity of portfolio companies.
The full investment policy can be found above.
Current portfolio sector allocation
The pie chart at the end of this announcement shows the split of the
portfolio valuation by sector as at 31 December 2018. Details of the
principal investments made by the Company are shown in the Portfolio of
investments on pages 18 to 20 of the full Annual Report and Financial
Statements.
Direction of portfolio
Following a change to the company's investment policy at the 2018 Annual
General Meeting, a greater focus has been given to growth and technology
investments, which will result in a decrease of asset-based investments
as a percentage of the portfolio over time. The change in investment
policy, which took into account recent changes in qualifying rules for
VCTs, was approved by shareholders with an encouraging 98.9 per cent. of
shares voted for the resolution.
The current portfolio is well balanced in terms of sectors, with
education accounting for 16 per cent., renewable energy at 16 per cent.
and pubs at 7 per cent.. We expect that the IT and other technology and
healthcare (including digital healthcare) sectors to continue gradually
increasing as a proportion of the portfolio.
Results and dividends Ordinary shares
GBP'000
Net revenue return for the year ended 31 December
2018 370
Net capital gain for the year ended 31 December 2018 9,389
---------------
Total return for the year ended 31 December 2018 9,759
Dividend of 2.0 pence per share paid on 29 June 2018 (2,081)
Dividend of 2.0 pence per share paid on 31 December
2018 (2,055)
Transferred to reserves 5,623
---------------
Net assets as at 31 December 2018 79,897
===============
Net asset value per share as at 31 December 2018 77.4p
===================================================== ===============
The Company paid dividends of 4.0 pence per share during the year ended
31 December 2018 (2017: 4.0 pence per share). The dividend objective of
the Board is to provide shareholders with a strong, predictable dividend
flow. The Board has declared a first dividend for the year ending 31
December 2019, of 2.0 pence per share to be paid on 28 June 2019 to
shareholders on the register on 7 June 2019.
As shown in the Income statement, investment income has increased to
GBP1,184,000 (2017: GBP995,000). This is in part due to interest
payments recommencing on investments where interest was previously being
capitalised in order to fund further growth and dividends received from
our holding in the SVS Albion OLIM UK Equity Income Fund. As a result,
the revenue return to equity holders has increased to GBP370,000 (2017:
GBP233,000).
The capital gain for the year was GBP9,389,000 (2017: GBP3,958,000).
This is mainly attributable to uplifts in valuations for Quantexa
(GBP2,429,000), Radnor House School (Holdings) (GBP1,264,000), Mirada
Medical (GBP1,404,000) and G. Network Communications (GBP1,195,000) and
the realised gain in the year of GBP1,785,000 on the sale of Grapeshot.
These were partly offset by unrealised losses on memsstar (GBP885,000)
and Mi-Pay Group (GBP314,000). The total return for the period was 9.5
pence per share (2017: 4.3 pence per share).
The Balance sheet shows that the net asset value per share has increased
over the last year to 77.4 pence per share (2017: 71.9 pence per share).
The increase in net asset value is attributed to the total return of 9.5
pence per share offset by the payment of 4.0 pence per share of
dividends.
The cash outflow for the year reflected the GBP4.4 million of new and
follow on investments, dividends paid of GBP3.5 million, buy-backs of
GBP1.6 million of shares and a further GBP0.9 million invested into the
SVS Albion OLIM UK Equity Income Fund. This was offset by the issue of
new shares under the Albion VCTs Top Up Offers which raised GBP2.6
million and GBP5.6 million received from the disposal of investments and
receipt of deferred consideration.
Review of business and outlook
A review of the Company's business during the year and future prospects
is contained in the Chairman's statement above and in this Strategic
report.
Following changes to the VCT regulations in 2017, asset-based
investments will decrease over time as a proportion of the portfolio as
a greater emphasis continues to be given to growth and technology
investments. It is expected that with the changes in the investment
policy and to the VCT regulations, income will become a lower component
of total return in future years.
Details of significant events which have occurred since the end of the
financial year are listed in note 19. Details of transactions with the
Manager are shown in note 5.
Future prospects
As outlined in the Chairman's statement, the Company's portfolio remains
well balanced across sectors and risk classes. Following a promising
result for the year, and the performance of the growth and technology
investments in recent years, the Board has confidence in the future
performance of the Company. The Manager has a strong pipeline of
investment opportunities in which the Company's cash can be deployed.
Key performance indicators
The Directors believe that the following key performance indicators,
which are typical for venture capital trusts, used in its own assessment
of the Company, will provide shareholders with sufficient information to
assess how effectively the Company is applying its investment policy to
meet its objectives. The Directors are satisfied that the results shown
in the following key performance indicators give a good indication that
the Company is achieving its investment objective and policy. These are:
1. Net asset value per share and total shareholder return
Please see the "Total shareholder return to 31 December 2018" table
above in the Financial highlights section which shows the NAV per share
as at 31 December 2018 and total shareholder return. Total shareholder
return is net asset value plus cumulative dividends paid since launch.
Total shareholder return increased by 9.5 pence to 176.4 pence per
Ordinary share for the year ended 31 December 2018 (13.2 per cent. on
the opening net asset value).
The graph on page 4 of the full Annual Report and Financial Statements
reflects the total shareholder return performance of the Company
relative to the FTSE All-share Index.
1. Dividend distributions
Dividends paid in respect of the year ended 31 December 2018 were 4.0
pence per share (2017: 4.0 pence per share), in line with the Boards
dividend objective. Cumulative dividends paid since inception are 99.0
pence per Ordinary share.
1. Ongoing charges
As agreed with the Manager in 2015, the ongoing charges ratio for the
year to 31 December 2018 was capped at 2.75 per cent. (2017: 2.75 per
cent.) from a previous cap of 3 per cent. with any excess over the cap
being a reduction in the management fee. The ongoing charges ratio has
been calculated using The Association of Investment Companies' (AIC)
recommended methodology. This figure shows shareholders the total
recurring annual running expenses (including investment management fees
charged to capital reserve) as a percentage of the average net assets
attributable to shareholders. The Directors expect the ongoing charges
ratio for the year ahead to be 2.75 per cent. (capped at 2.75 per
cent.).
The reduction in management fees payable to Albion Capital Group LLP in
the year, due to the expense cap, amounted to GBP136,000 (2017:
GBP137,000).
1. VCT regulation
The investment policy is designed to ensure that the Company continues
to qualify and is approved as a VCT by HMRC. In order to maintain its
status under Venture Capital Trust legislation, a VCT must comply on a
continuing basis with the provisions of Section 274 of the Income Tax
Act 2007, details of which are provided in the Directors' report on page
28 of the full Annual Report and Financial Statements.
The relevant tests to measure compliance have been carried out and
independently reviewed for the year ended 31 December 2018. These showed
that the Company has complied with all tests and continues to do so.
Gearing
As defined by the Articles of Association, the Company's maximum
exposure in relation to gearing is restricted to 10 per cent. of the
adjusted share capital and reserves. Although the investment policy
permits the Company to borrow, the Directors do not currently have any
intention of utilising long-term gearing and have not done so in the
past.
Operational arrangements
The Company has delegated the investment management of the portfolio to
Albion Capital Group LLP, which is authorised and regulated by the
Financial Conduct Authority. Albion Capital Group LLP also provides
company secretarial and other accounting and administrative support to
the Company under the Management Agreement.
Management agreement
Under the Management agreement, the Manager provides investment
management, secretarial and administrative services to the Company. The
Management agreement can be terminated by either party on 12 months'
notice and is subject to earlier termination in the event of certain
breaches or on the insolvency of either party. The Manager is paid an
annual fee equal to 2.5 per cent. of the net asset value of the Company,
payable quarterly in arrears. The total annual running costs of the
Company, including fees payable to Albion, Directors' fees, professional
fees and the costs incurred by the Company in the ordinary course of
business (but excluding any exceptional items and performance fees
payable to Albion) are capped at an amount equal to 2.75 per cent. of
the Company's net assets, with any excess being met by Albion by way of
a reduction in management fees.
Additionally, Albion agreed to reduce that proportion of its management
fee relating to the investment in the SVS Albion OLIM UK Equity Income
Fund ("OUEIF") in order to avoid any double charging for the investment
exposure.
The Manager is also entitled to an arrangement fee on investment,
payable by each portfolio company, of approximately 2 per cent. of each
investment made and monitoring fees where the Manager has a
representative on the portfolio company's board. Further details of the
Manager's fee can be found in note 5.
Management performance incentive
In order to provide the Manager with an incentive to maximise the return
to investors, the Manager is entitled to charge an incentive fee in the
event that the returns exceed minimum target levels per share.
Under the incentive arrangement, if the net asset value per share at the
end of a financial period, when added to the aggregate dividends per
share (both revenue and capital) paid to that date, exceeds GBP1 as
increased at the rate of RPI plus 2 per cent. per annum uncompounded
from the date of first admission to the Official List of the relevant
class of share, then the Manager will be entitled to an incentive fee
equal to 15 per cent. of such excess. In the event that the performance
of the Company falls short of the target in any period, such shortfall
must be made up in future periods before the Manager is entitled to any
incentive in respect of such future periods.
The fee if applicable, will be payable annually. No performance fee has
arisen during the year (2017: GBPnil). The performance threshold at 31
December 2018 was 196.5 pence for the Ordinary shares, 169.7 pence for
the former C shares and 175.5 pence for the former Income & Growth
shares which compare to total returns of 176.4 pence, 101.3 pence and
105.2 pence respectively, based on the latest NAV.
For the previous two years, the Company's return has exceeded dividends
paid, with a return of 9.5 pence per share (13.2 per cent. of opening
NAV) in the year to 31 December 2018. However, the total return has
fallen short of the hurdle by 20.1 pence per Ordinary share. In recent
years the Company has issued substantial new shares under the Top Up
Offers and also through the Dividend Reinvestment Scheme. The Company
has also bought back substantial shares, with both buyback and issuance
altering the equity balance of the Company.
In light of these factors, the Board is intending to review the current
performance incentive arrangements to determine their effectiveness and
to ensure that Manager incentivisation and objectives are aligned with
the interests of the Company.
Investment and co-investment
The Company co-invests with other Albion Capital Group LLP managed
venture capital trusts and funds. Allocation of investments is on the
basis of an allocation agreement which is based, inter alia, on the
ratio of funds available for investment.
Evaluation of the Manager
The Board has evaluated the performance of the Manager based on:
-- the returns generated by the Company;
-- the continuing achievement of the 70 per cent. (to be 80 per cent. in
respect of accounting periods starting on or after 6 April 2019)
qualifying holdings investment requirement for venture capital trust
status;
-- the long term prospects of the current portfolio of investments;
-- a review of the Management agreement and the services provided therein;
and
-- benchmarking the performance of the Manager to other service providers
including the performance of other VCTs that the Manager is responsible
for managing.
The Board believes that it is in the interests of shareholders as a
whole, and of the Company, to continue the appointment of the Manager
for the forthcoming year.
Alternative Investment Fund Managers Directive ("AIFMD")
The Board appointed Albion Capital Group LLP as the Company's AIFM in
June 2014 as required by the AIFMD. The Manager became a full-scope
Alternative Investment Fund Manager under the AIFMD on 1 October 2018.
As a result, from that date, Ocorian (UK) Limited was appointed as
Depository to oversee the custody and cash arrangements and provide
other AIFMD duties with respect to the Company.
Social and community issues, employees and human rights
The Board recognises the requirement under section 414C of the Companies
Act 2006 (the "Act") to detail information about social and community
issues, employees and human rights; including any policies it has in
relation to these matters and effectiveness of these policies. As an
externally managed investment company with no employees, the Company has
no policies in these matters and as such these requirements do not
apply.
General Data Protection Regulation ("GDPR")
The General Data Protection Regulation came into effect from 25 May 2018
with the objective of unifying data privacy requirements across the
European Union. The Manager, Albion Capital Group LLP, has taken action
to ensure that the Manager and the Company are compliant with the
regulation.
Further policies
The Company has adopted a number of further policies relating to:
-- Environment
-- Global greenhouse gas emissions
-- Anti-bribery
-- Anti-facilitation of tax evasion
-- Diversity
and these are set out in the Directors' report on pages 28 and 29 of the
full Annual Report and Financial Statements.
Risk management
The Board carries out a regular review of the risk environment in which
the Company operates. The principal risks and uncertainties of the
Company as identified by the Board and how they are managed are as
follows:
Risk Possible consequence Risk management
----------- ------------------------------------------------------------- ------------------------------------------------------------
Investment The risk of investment in poor quality assets, which To reduce this risk, the Board places reliance upon
and could reduce the capital and income returns to shareholders, the skills and expertise of the Manager and its track
performance and could negatively impact on the Company's current record over many years of making successful investments
risk and future valuations. in this segment of the market. In addition, the Manager
By nature, smaller unquoted businesses, such as those operates a formal and structured investment appraisal
that qualify for venture capital trust purposes, are and review process, which includes an Investment Committee,
more volatile than larger, long established businesses. comprising investment professionals from the Manager
Investments in open-ended equity funds result in exposure and at least one external investment professional.
to market risk through movements in price per unit. The Manager also invites and takes account of comments
from non-executive Directors of the Company on matters
discussed at the Investment Committee meetings. Investments
are actively and regularly monitored by the Manager
(investment managers normally sit on portfolio company
boards), including the level of diversification in
the portfolio, and the Board receives detailed reports
on each investment as part of the Manager's report
at quarterly board meetings. The Board and Manager
regularly reviews the deployment of cash resources
into equity markets, the extent of exposure and performance
of the exposure.
----------- ------------------------------------------------------------- ------------------------------------------------------------
VCT The Company must comply with section 274 of the Income To reduce this risk, the Board has appointed the Manager,
approval Tax Act 2007 which enables its investors to take advantage which has a team with significant experience in venture
risk of tax relief on their investment and on future returns. capital trust management, used to operating within
Breach of any of the rules enabling the Company to the requirements of the venture capital trust legislation.
hold VCT status could result in the loss of that status. In addition, to provide further formal reassurance,
the Board has appointed Philip Hare & Associates LLP
as its taxation adviser, who report quarterly to the
Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas
of risk and to inform on changes in legislation. Each
investment in a portfolio company is also pre-cleared
with our professional advisers or H.M. Revenue & Customs.
----------- ------------------------------------------------------------- ------------------------------------------------------------
Regulatory The Company is listed on The London Stock Exchange Board members and the Manager have experience of operating
and and is required to comply with the rules of the UK at senior levels within or advising quoted companies.
compliance Listing Authority, as well as with the Companies Act, In addition, the Board and the Manager receive regular
risk Accounting Standards and other legislation. Failure updates on new regulation, including legislation on
to comply with these regulations could result in a the management of the Company, from its auditor, lawyers
delisting of the Company's shares, or other penalties and other professional bodies. The Company is subject
under the Companies Act or from financial reporting to compliance checks through the Manager's compliance
oversight bodies. officer. The Manager reports monthly to its Board
on any issues arising from compliance or regulation.
These controls are also reviewed as part of the quarterly
Board meetings, and also as part of the review work
undertaken by the Manager's compliance officer. The
report on controls is also evaluated by the internal
auditors.
----------- ------------------------------------------------------------- ------------------------------------------------------------
Market The market value of Ordinary shares can fluctuate. The Company operates a share buyback policy, which
value of The market value of an Ordinary share, as well as is designed to limit the discount at which the Ordinary
Ordinary being affected by its net asset value and prospective shares trade to around 5 per cent. to net asset value,
shares net asset value, also takes into account its dividend by providing a purchaser through the Company in absence
yield and prevailing interest rates. As such, the of market purchasers. From time to time buy-backs
market value of an Ordinary share may vary considerably cannot be applied, for example when the Company is
from its underlying net asset value. The market prices subject to a close period, or if it were to exhaust
of shares in quoted investment companies can, therefore, and could not renew any buyback authorities.
be at a discount or premium to the net asset value New Ordinary shares are issued at sufficient premium
at different times, depending on supply and demand, to net asset value to cover the costs of issue and
market conditions, general investor sentiment and to avoid asset value dilution to existing investors.
other factors, including the ability to exercise share
buybacks. Accordingly the market price of the Ordinary
shares may not fully reflect their underlying net
asset value.
----------- ------------------------------------------------------------- ------------------------------------------------------------
Operational The Company relies on a number of third parties, in The Company and its operations are subject to a series
and particular the Manager, for the provision of investment of rigorous internal controls and review procedures
internal management and administrative functions. Failures exercised throughout the year, and receives reports
control in key systems and controls within the Manager's business from the Manager on internal controls and risk management,
risk could put assets of the Company at risk or result including on matters relating to cyber security.
in reduced or inaccurate information being passed The Audit Committee reviews the Internal Audit Reports
to the Board or to shareholders. prepared by the Manager's internal auditors, PKF Littlejohn
LLP. On an annual basis, the Audit Committee chairman
meets with the internal audit partner to provide an
opportunity to ask specific detailed questions in
order to satisfy itself that the Manager has strong
systems and controls in place including those in relation
to business continuity and cyber security.
From 1 October 2018, Ocorian (UK) Limited were appointed
as Depository to oversee the custody and cash arrangements
and provide other AIFMD duties. The Board reviews
the quarterly reports prepared by Ocorian (UK) Limited
to ensure that Albion Capital is adhering to its duties
as a full-scope Alternative Investment Fund Manager
under the AIFMD.
In addition, the Board regularly reviews the performance
of its key service providers, particularly the Manager,
to ensure they continue to have the necessary expertise
and resources to deliver the Company's investment
policy. The Manager and other service providers have
also demonstrated to the Board that there is no undue
reliance placed upon any one individual.
----------- ------------------------------------------------------------- ------------------------------------------------------------
Economic Changes in economic conditions, including, for example, The Company invests in a diversified portfolio of
and interest rates, rates of inflation, industry conditions, companies across a number of industry sectors and
political competition, political and diplomatic events and other in addition often invests a mixture of instruments
risk factors could substantially and adversely affect the in portfolio companies and has a policy of not normally
Company's prospects in a number of ways. permitting any external bank borrowings within portfolio
companies.
At any given time, the Company has sufficient cash
resources to meet its operating requirements, including
share buy backs and follow on investments.
----------- ------------------------------------------------------------- ------------------------------------------------------------
Viability statement
In accordance with the FRC UK Corporate Governance Code published in
2016 and principle 21 of the AIC Code of Corporate Governance, the
Directors have assessed the prospects of the Company over three years to
31 December 2021. The Directors believe that three years is a reasonable
period in which they can assess the future of the Company to continue to
operate and meet its liabilities as they fall due and is also the period
used by the Board in the strategic planning process and is considered
reasonable for a business of our nature and size. The three year period
is considered the most appropriate given the forecasts that the Board
require from the Manager and the estimated timelines for finding,
assessing and completing investments.
The Directors have carried out a robust assessment of the principal
risks facing the Company as explained above, including those that could
threaten its business model, future performance, solvency or liquidity.
The Board also considered the risk management processes in place to
avoid or reduce the impact of the underlying risks. The Board focused on
the major factors which affect the economic, regulatory and political
environment. The Board deliberated over the importance of the Manager
and the processes that they have in place for dealing with the principal
risks.
The Board assessed the ability of the Company to raise finance and
deploy capital. The portfolio is well balanced after the process of
reducing the proportion of the portfolio's holdings of older
investments. In assessing the prospects of the Company, the Directors
have considered the cash flow by looking at the Company's income and
expenditure projections and funding pipeline over the assessment period
of three years and they appear realistic.
Taking into account the processes for mitigating risks, monitoring costs,
share price discount, the Manager's compliance with the investment
objective, policies and business model and the balance of the portfolio
the Directors have concluded that there is a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the three year period to 31 December
2021.
This Strategic report of the Company for the year ended 31 December 2018
has been prepared in accordance with the requirements of section 414A of
the Act. The purpose of this report is to provide shareholders with
sufficient information to enable them to assess the extent to which the
Directors have performed their duty to promote the success of the
Company in accordance with section 172 of the Act.
On behalf of the Board,
Dr. N E Cross
Chairman
22 March 2019
Responsibility Statement
In preparing these financial statements for the year to 31 December
2018, the Directors of the Company, being Dr Neil Cross, Robin Archibald,
Mary Anne Cordeiro, Modwenna Rees-Mogg and Patrick Reeve, confirm that
to the best of their knowledge:
- summary financial information contained in this announcement and the
full Annual Report and Financial Statements for the year ended 31
December 2018 for the Company has been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice (UK Accounting
Standards and applicable law) and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
-the Chairman's statement and Strategic report include a fair review of
the development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties it faces.
We consider that the Annual Report and Financial Statements, taken as a
whole, are fair, balanced, and understandable and provide the
information necessary for shareholders to assess the Company's position,
performance, business model and strategy.
A detailed "Statement of Directors' responsibilities" is contained on
page 32 within the full audited Annual Report and Financial Statements.
On behalf of the Board,
Dr N E Cross
Chairman
22 March 2019
Income statement
Year ended 31 December Year ended 31 December
2018 2017
--------------------------------------------------- ---- -------------------------- --------------------------
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ---- ------- ------- -------- ------- ------- --------
Gains on investments 3 - 10,709 10,709 - 5,145 5,145
Investment income 4 1,184 - 1,184 995 - 995
Investment management fees 5 (460) (1,379) (1,839) (410) (1,231) (1,641)
Other expenses 6 (295) - (295) (308) - (308)
------- ------- -------- ------- ------- --------
Profit on ordinary activities before tax 429 9,330 9,759 277 3,914 4,191
Tax (charge)/credit on ordinary activities 8 (59) 59 - (44) 44 -
------- ------- -------- ------- ------- --------
Profit and total comprehensive income attributable
to shareholders 370 9,389 9,759 233 3,958 4,191
------- ------- -------- ------- ------- --------
Basic and diluted return per share (pence)* 10 0.4 9.1 9.5 0.2 4.1 4.3
--------------------------------------------------- ---- ------- ------- -------- ------- ------- --------
* excluding treasury shares
The accompanying notes form an integral part of these Financial
Statements.
The total column of this Income statement represents the profit and loss
account of the Company. The supplementary revenue and capital columns
have been prepared in accordance with The Association of Investment
Companies' Statement of Recommended Practice.
Balance sheet
31 December 2018 31 December 2017
Note GBP'000 GBP'000
------------------------------------ ---- ---------------- ----------------
Fixed asset investments 11 70,737 60,724
Current assets
Current asset investments 13 1,921 1,372
Trade and other receivables less
than one year 13 664 930
Cash and cash equivalents 7,142 10,154
---------------- ----------------
9,727 12,456
Total assets 80,464 73,180
Payables: amounts falling due within
one year
Trade and other payables less than
one year 14 (567) (532)
---------------- ----------------
Total assets less current
liabilities 79,897 72,648
---------------- ----------------
Equity attributable to equity
holders
Called up share capital 15 1,187 1,143
Share premium 26,621 23,469
Capital redemption reserve 28 28
Unrealised capital reserve 16,697 9,692
Realised capital reserve 10,933 8,549
Other distributable reserve 24,431 29,767
---------------- ----------------
Total equity shareholders' funds 79,897 72,648
---------------- ----------------
Basic and diluted net asset value
per share (pence)* 16 77.4 71.9
* excluding treasury shares
The accompanying notes form an integral part of these Financial
Statements.
These Financial Statements were approved by the Board of Directors, and
were authorised for issue on 22 March 2019 and were signed on its behalf
by
Dr. N E Cross
Chairman
Company number: 04114310
Statement of changes in equity
Called
up Capital Unrealised Realised Other
share Share redemption capital capital distributable
capital premium reserve reserve reserve* reserve* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- ------- -------- ---------- ---------- -------- ------------- -------
As at 1 January 2018 1,143 23,469 28 9,692 8,549 29,767 72,648
Return and total comprehensive income for the year - - - 8,910 479 370 9,759
Transfer of previously unrealised gains on disposal
of investments - - - (1,905) 1,905 - -
Purchase of shares for treasury - - - - - (1,570) (1,570)
Issue of equity 44 3,233 - - - - 3,277
Cost of issue of equity - (81) - - - - (81)
Dividends paid - - - - - (4,136) (4,136)
As at 31 December 2018 1,187 26,621 28 16,697 10,933 24,431 79,897
----------------------------------------------------- ------- -------- ---------- ---------- -------- ------------- -------
As at 1 January 2017 1,007 46,585 28 4,625 9,658 2,523 64,426
Return/(loss) and total comprehensive income for the
year - - - 4,750 (792) 233 4,191
Transfer of previously unrealised losses on disposal
of investments - - - 317 (317) - -
Purchase of shares for treasury - - - - - (1,719) (1,719)
Issue of equity 136 9,750 - - - - 9,886
Cost of issue of equity - (245) - - - - (245)
Cancellation of Share premium** - (32,621) - - - 32,621 -
Dividends paid - - - - - (3,891) (3,891)
As at 31 December 2017 1,143 23,469 28 9,692 8,549 29,767 72,648
----------------------------------------------------- ------- -------- ---------- ---------- -------- ------------- -------
* These reserves amount to GBP35,364,000 (2017: GBP38,316,000) which is
considered distributable.
** In the year to 31 December 2017, following approval by shareholders
and the High Court, an amount of GBP32,620,666 was reclassified to the
other distributable reserve.
Statement of cash flows
Year ended 31 December Year ended 31 December
2018 2017
GBP'000 GBP'000
------------------------- ------------------------ -------------------------
Cash flow from operating
activities
Loan stock income
received 1,098 921
Dividend income received 119 74
Deposit interest received 25 7
Investment management
fees paid (1,803) (1,569)
Other cash payments (293) (295)
Corporation tax received - 1
Net cash flow from
operating activities (854) (861)
Cash flow from investing
activities
Purchase of current asset
investments (910) (1,350)
Purchase of fixed asset
investments (4,354) (6,623)
Disposal of fixed asset
investments 5,621 8,202
Net cash flow from
investing activities 357 229
Cash flow from financing
activities
Issue of ordinary share
capital 2,606 9,072
Cost of issue of equity (15) (3)
Dividends paid (3,536) (3,318)
Purchase of own shares
(including costs) (1,570) (1,717)
Net cash flow from
financing activities (2,515) 4,034
(Decrease)/increase in
cash and cash
equivalents (3,012) 3,402
Cash and cash equivalents
at start of period 10,154 6,752
------------------------ -------------------------
Cash and cash equivalents
at end of period 7,142 10,154
Cash and cash equivalents
comprise
Cash at bank and in hand 7,142 10,154
Cash equivalents - -
Total cash and cash
equivalents 7,142 10,154
Notes to the Financial Statements
1. Basis of preparation
The Financial Statements have been prepared in accordance with the
historical cost convention, modified to include the revaluation of
investments, in accordance with applicable United Kingdom law and
accounting standards, including Financial Reporting Standard 102 ("FRS
102"), and with the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital Trusts"
("SORP") issued by The Association of Investment Companies ("AIC").
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The most
critical estimates and judgements relate to the determination of
carrying value of investments at fair value through profit and loss
("FVTPL"). The Company values investments by following the International
Private Equity and Venture Capital Valuation ("IPEV") Guidelines and
further detail on the valuation techniques used are outlined in note 2
below.
Company information can be found on page 2 of the full Annual Report and
Financial Statements.
2. Accounting policies
Fixed and current asset investments
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital
growth. This portfolio of financial assets is managed and its
performance evaluated on a fair value basis, in accordance with a
documented investment policy, and information about the portfolio is
provided internally on that basis to the Board.
In accordance with the requirements of FRS 102, those undertakings in
which the Company holds more than 20 per cent. of the equity as part of
an investment portfolio are not accounted for using the equity method.
In these circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments,
including loan stock, are classified by the Company as FVTPL and are
included at their initial fair value, which is cost (excluding expenses
incidental to the acquisition which are written off to the Income
statement).
Subsequently, the investments are valued at 'fair value', which is
measured as follows:
-- Investments listed on recognised exchanges, including liquid open-ended
equity funds, are valued at their bid prices at the end of the accounting
period or otherwise at fair value based on published price quotations;
-- Unquoted investments, where there is not an active market, are valued
using an appropriate valuation technique in accordance with the IPEV
Guidelines. Indicators of fair value are derived using established
methodologies including earnings multiples, the level of third party
offers received, prices of recent investment rounds, net assets and
industry valuation benchmarks. Where the Company has an investment in an
early stage enterprise, the price of a recent investment round is often
the most appropriate approach to determining fair value. In situations
where a period of time has elapsed since the date of the most recent
transaction, consideration is given to the circumstances of the portfolio
company since that date in determining fair value. This includes
consideration of whether there is any evidence of deterioration or strong
definable evidence of an increase in value. In the absence of these
indicators, the investment in question is valued at the amount reported
at the previous reporting date. Examples of events or changes that could
indicate a diminution include:
-- the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was
based;
-- a significant adverse change either in the portfolio company's
business or in the technological, market, economic, legal or
regulatory environment in which the business operates; or
-- market conditions have deteriorated, which may be indicated by a
fall in the share prices of quoted businesses operating in the
same or related sectors.
Investments are recognised as financial assets on legal completion of
the investment contract and are de-recognised on legal completion of the
sale of an investment.
Dividend income is not recognised as part of the fair value movement of
an investment, but is recognised separately as investment income through
the other distributable reserve when a share becomes ex-dividend.
Receivables, payables and cash are carried at amortised cost, in
accordance with FRS 102. There are no financial liabilities other than
payables.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted
ex-dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised
when the Company's right to receive payment and expected settlement is
established. Where interest is rolled up and/or payable at redemption
then it is recognised as income unless there is reasonable doubt as to
its receipt.
Bank interest income
Interest income is recognised on an accruals basis using the rate of
interest agreed with the bank.
Investment management fees, performance incentive fees and expenses
All expenses have been accounted for on an accruals basis. Expenses are
charged through the other distributable reserve except the following
which are charged through the realised capital reserve:
-- 75 per cent. of management fees and performance incentive fees are
allocated to the realised capital reserve. This is in line with the
Board's expectation that over the long term 75 per cent. of the Company's
investment returns will be in the form of capital gains; and
-- expenses which are incidental to the purchase or disposal of an
investment are charged through the realised capital reserve.
Taxation
Taxation is applied on a current basis in accordance with FRS 102.
Current tax is tax payable (refundable) in respect of the taxable profit
(tax loss) for the current period or past reporting periods using the
tax rates and laws that have been enacted or substantively enacted at
the financial reporting date. Taxation associated with capital expenses
is applied in accordance with the SORP.
Deferred tax is provided in full on all timing differences at the
reporting date. Timing differences are differences between taxable
profits and total comprehensive income as stated in the Financial
Statements that arise from the inclusion of income and expenses in tax
assessments in periods different from those in which they are recognised
in the Financial Statements. As a VCT the Company has an exemption from
tax on capital gains. The Company intends to continue meeting the
conditions required to obtain approval as a VCT in the foreseeable
future. The Company therefore, should have no material deferred tax
timing differences arising in respect of the revaluation or disposal of
investments and the Company has not provided for any deferred tax.
Reserves
Share premium
This reserve accounts for the difference between the price paid for
shares and the nominal value of the shares, less issue costs.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own
shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year
end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
-- gains and losses compared to cost on the realisation of investments;
-- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
-- dividends paid to equity holders.
Other distributable reserve
The special reserve, treasury share reserve and the revenue reserve were
combined in 2012 to form a single reserve named other distributable
reserve.
This reserve accounts for movements from the revenue column of the
Income statement, the payment of dividends, the buy-back of shares and
other non-capital realised movements.
Dividends
Dividends by the Company are accounted for in the period in which the
dividend is paid or approved at the Annual General Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
operating segment of business, being investment in smaller companies
principally based in the UK.
3. Gains on investments
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
Unrealised gains on fixed asset
investments 9,271 4,728
Unrealised (losses)/gains on current
asset investments (361) 22
Realised gains on fixed asset
investments 1,799 395
10,709 5,145
----------------- -----------------
4. Investment income
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------------
Loan stock interest and other fixed
returns 1,039 915
UK dividend income 119 74
Bank deposit interest 26 6
1,184 995
----------------- -----------------
Interest income earned on investments valued below cost at 31 December
2018 amounted to GBP8,000 (2017: GBP3,000).
5. Investment management fees
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
Investment management fee charged to
revenue 460 410
Investment management fee charged to
capital 1,379 1,231
----------------- -----------------
1,839 1,641
----------------- -----------------
Further details of the Management agreement under which the investment
management fee is paid are given in the Strategic report.
During the year, services of a total value of GBP1,839,000 (2017:
GBP1,641,000) were purchased by the Company from Albion Capital Group
LLP in respect of management fees. At the financial year end, the amount
due to Albion Capital Group LLP in respect of these services disclosed
as accruals was GBP482,000 (2017: GBP446,000). The total annual running
costs of the Company are capped at an amount equal to 2.75 per cent. of
the Company's net assets, with any excess being met by Albion by way of
a reduction in management fees. During the year, the management fee was
reduced by GBP136,000 as a result of this cap (2017: GBP137,000).
During the year, the Company was not charged by Albion Capital Group LLP
in respect of Patrick Reeve's services as a Director (2017: nil).
Albion Capital Group LLP, its partners and staff (including Patrick
Reeve) hold 991,925 Ordinary shares in the Company.
Albion Capital Group LLP is, from time to time, eligible to receive
arrangement fees and monitoring fees from portfolio companies. During
the year ended 31 December 2018, fees of GBP214,000 attributable to the
investments of the Company were received by Albion Capital Group LLP
pursuant to these arrangements (2017: GBP305,000).
During the period, an amount of GBP910,000 (2017: GBP1,350,000) was
invested in the SVS Albion OLIM UK Equity Income Fund ("OUEIF") as part
of the Company's management of surplus liquid funds. To avoid double
charging, Albion agreed to reduce its management fee relating to the
investment in the OUEIF by 0.75 per cent. per annum, which represents
the OUEIF management fee charged by OLIM. This resulted in a further
reduction of the management fee of GBP15,000 (2017: GBP3,000).
6. Other expenses
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
Directors' fees (including NIC) 101 101
Auditor's remuneration for statutory audit services
(excluding VAT) 28 28
Tax services 21 17
Other administrative expenses 145 162
295 308
----------------- -----------------
7. Directors' fees
The amounts paid to and on behalf of the Directors during the year are
as follows:
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
Directors' fees 93 93
National insurance 8 8
----------------- -----------------
101 101
----------------- -----------------
The Company's key management personnel are the Directors. Further
information regarding Directors' remuneration can be found in the
Directors' remuneration report on pages 38 to 40 of the full Annual
Report and Financial Statements.
8. Tax on ordinary activities
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
UK corporation tax charge payable - -
----------------- -----------------
Factors affecting the tax charge:
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
Return on ordinary activities before taxation 9,759 4,191
----------------- -----------------
Tax charge on profit at the average companies rate
of 19.00% (2017: 19.25%) 1,854 807
Factors affecting the charge:
Non-taxable gains (2,035) (990)
Income not taxable (23) (14)
Non-deductible expenses - 5
Excess management expenses carried forward 204 192
- -
----------------- -----------------
The tax charge for the year shown in the Income statement is lower than
the average companies rate of corporation tax in the UK of 19 per cent.
(2017: 19.25 per cent.). The differences are explained above.
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital
gains.
(ii) Tax relief on expenses charged to capital has been determined by
allocating tax relief to expenses by reference to the applicable
corporation tax rate and allocating the relief between revenue and
capital in accordance with the SORP.
(iii) The Company has excess management expenses of GBP2,348,000 (2017:
GBP1,268,000) that are available for offset against future profits. A
deferred tax asset of GBP446,000 (2017: GBP216,000) has not been
recognised in respect of these losses as they will be recoverable only
to the extent that the Company has sufficient future taxable profits.
9. Dividends
Year ended Year ended
31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------------
Dividend of 1p per share paid on 31
January 2017 - 900
Dividend of 1p per share paid on 30 June
2017 - 978
Dividend of 2p per share paid on 29
December 2017 - 2,013
Dividend of 2p per share paid on 29 June
2018 2,081 -
Dividend of 2p per share paid on 31
December 2018 2,055 -
4,136 3,891
----------------- -----------------
In addition to the dividends summarised above, the Board has declared a
first dividend for the year ending 31 December 2019 of 2 pence per
share. The dividend will be paid on 28 June 2019 to shareholders on the
register on 7 June 2019. The total dividend will be approximately
GBP2,064,000. All dividends are paid out of the other distributable
reserve as shown on the Balance sheet.
10. Basic and diluted return per share
Year ended 31 December Year ended 31 December
2018 2017
Revenue Capital Total Revenue Capital Total
-----------------------------------------------------
Profit attributable to equity shares (GBP'000) 370 9,389 9,759 233 3,958 4,191
Weighted average shares in issue (excluding treasury
shares) 103,202,241 96,895,249
Return attributable per equity share (pence) 0.4 9.1 9.5 0.2 4.1 4.3
The weighted average number of shares is calculated excluding treasury
shares of 15,518,470 (2017: 13,268,070).
There are no convertible instruments, derivatives or contingent share
agreements in issue, and therefore no dilution affecting the return per
share. The basic return per share is therefore the same as the diluted
return per share.
11. Fixed asset investments
31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------------
Investments held at fair value through
profit or loss
Unquoted equity and preference shares 43,611 32,338
Quoted equity 799 1,106
Unquoted loan stock 26,327 27,280
70,737 60,724
---------------- ----------------
31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------------------------------
Opening valuation 60,724 57,021
Purchases at cost 5,211 7,861
Disposal proceeds (6,206) (9,265)
Realised gains 1,799 395
Movement in loan stock accrued income (62) (16)
Unrealised gains 9,271 4,728
---------------- ----------------
Closing valuation 70,737 60,724
---------------- ----------------
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued
income 405 421
Movement in loan stock accrued income (62) (16)
---------------- ----------------
Closing accumulated movement in loan stock accrued
income 343 405
---------------- ----------------
Movement in unrealised gains
Opening accumulated unrealised gains 9,622 4,577
Transfer of previously unrealised (gains)/losses to
realised reserve on disposal of investments (1,905) 317
Movement in unrealised gains 9,271 4,728
---------------- ----------------
Closing accumulated unrealised gains 16,988 9,622
---------------- ----------------
Historic cost basis
Opening book cost 50,697 52,023
Purchases at cost 5,211 7,861
Sales at cost (2,502) (9,187)
Closing book cost 53,406 50,697
---------------- ----------------
Purchases and disposals detailed above do not agree to the Statement of
cash flows due to restructuring of investments, conversion of
convertible loan stock and settlement receivables and payables.
The Company does not hold any assets as the result of the enforcement of
security during the period, and believes that the carrying values for
both those valued below cost and past due assets are covered by the
value of security held for these loan stock investments.
Unquoted fixed asset investments are valued at fair value in accordance
with the IPEV guidelines as follows:
31 December 2018 31 December 2017
Valuation methodology GBP'000 GBP'000
--------------------------------------------------
Cost and price of recent investment (reviewed for
impairment or uplift) 24,948 13,841
Third party valuation - earnings multiple 16,707 15,380
Third party valuation -- discounted cash flow 10,654 11,891
Revenue multiple 7,543 10,403
Net assets 5,487 5,485
Contracted sale price 2,482 -
Earnings multiple 2,117 2,618
69,938 59,618
---------------- ----------------
Where the cost or price of recent investment has been used the valuer
has assessed whether changes or events subsequent to the relevant
transaction would imply a change in the investment's fair value.
Fair value investments had the following movements between valuation
methodologies between 31 December 2017 and 31 December 2018:
Change in valuation methodology (2017 to 2018) 31 December 2018 Explanatory
GBP'000 note
-----------------------------------------------------------
Revenue multiple to price of recent investment 3,356 Recent
external
funding
round
Third party valuation -- discounted cash flow to contracted 2,482 Third party
sale price offer
accepted
Cost to earnings multiple 663 More
appropriate
valuation
methodology
The valuation will be the most appropriate valuation methodology for an
investment within its market, with regard to the financial health of the
investment and the IPEV Guidelines. The Directors believe that, within
these parameters, there are no other possible methods of valuation which
would be reasonable as at 31 December 2018.
FRS 102 and the SORP requires the Company to disclose the inputs to the
valuation methods applied to its investments measured at FVTPL in a fair
value hierarchy. The table below sets out fair value hierarchy
definitions using FRS102 s.11.27.
Fair value hierarchy Definition
-------------------- ----------------------------------------------------
Level 1 Unadjusted quoted prices in an active market
-------------------- ----------------------------------------------------
Level 2 Inputs to valuations are from observable sources and
are directly or indirectly derived from prices
-------------------- ----------------------------------------------------
Level 3 Inputs to valuations not based on observable market
data
-------------------- ----------------------------------------------------
Quoted investments are valued according to Level 1 valuation methods.
Unquoted equity, preference shares and loan stock are all valued
according to Level 3 valuation methods.
Investments held at fair value through profit or loss (Level 3) had the
following movements:
31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------------------- ---------------- ----------------
Opening balance 59,618 55,171
Purchases at cost 5,211 7,861
Disposals proceeds (6,206) (9,265)
Movement in loan stock accrued income (62) (16)
Realised gains 1,799 395
Unrealised gains 9,578 5,472
---------------- ----------------
Closing balance 69,938 59,618
---------------- ----------------
FRS 102 requires the Directors to consider the impact of changing one or
more of the inputs used as part of the valuation process to reasonable
possible alternative assumptions. 67 per cent. of the portfolio of
investments is based on cost, recent investment price, net assets or is
loan stock, and as such the Board considers that the assumptions used
for their valuations are the most reasonable. The Directors believe that
changes to reasonable possible alternative assumptions (by adjusting the
revenue and earnings multiples) for the valuations of the remainder of
the portfolio companies could result in an increase in the valuation of
investments by GBP1,389,000 or a decrease in the valuation of
investments by GBP1,360,000. For valuations based on earnings and
revenue multiples, the Board considers that the most significant input
is the price/earnings ratio; for valuations based on third party
valuations, the Board considers that the most significant inputs are
price/earnings ratio, discount factors and market values for buildings;
which have been adjusted to drive the above sensitivities.
12. Significant interests
The principal activity of the Company is to select and hold a portfolio
of investments. Although the Company, through the Manager, will, in some
cases, be represented on the Board of the portfolio company, it will not
take a controlling interest or become involved in the management. The
size and structure of the companies with unquoted securities may result
in certain holdings in the portfolio representing a participating
interest without there being any partnership, joint venture or
management consortium agreement. The investments listed below are held
as part of an investment portfolio and therefore, as permitted by FRS
102 section 14.4B, they are measured at FVTPL and not accounted for
using the equity method.
The Company has interests of greater than 20 per cent. of the nominal
value of any class of the allotted shares in the portfolio companies as
at 31 December 2018 as described below:
Result % total
Registered Profit/(loss) before tax Net assets/(liabilities) for year % class and voting
Company postcode GBP'000 GBP'000 ended share type rights
------------ ------------ ------------------------ ------------------------ --------- -------------- -------
Albion
Investment 31
Properties December 31.8% A
Limited EC2R 7AF, UK n/a* (762) 2017 Ordinary 31.8%
Bravo Inns 31 March
Limited WA4 1AG , UK n/a* (785) 2018 28.8% Ordinary 28.8%
MHS 1 31 March
Limited EC2R 7AF, UK n/a* (3,916) 2017 22.5% Ordinary 22.5%
31
memsstar December 67.3% A
Limited EH3 9EP, UK 847 1,523 2017 Ordinary 30.1%
Premier
Leisure
(Suffolk) 30 June
Limited EC2R 7AF, UK n/a* (1,484) 2017 25.8% Ordinary 25.8%
The Q Garden
Company 31 August 33.4% A
Limited EC2R 7AF, UK n/a* (4,595) 2017 Ordinary 33.4%
30
September
TWCL Limited EC2R 7AF, UK n/a* (3,454) 2017 25.2% Ordinary 25.2%
*The company files filleted accounts which does not disclose this
information.
13. Current assets
Current asset investments 31 December 2018 31 December 2017
GBP'000 GBP'000
-------------------------------------- ---------------- ----------------
SVS Albion OLIM UK Equity Income Fund 1,921 1,372
---------------- ----------------
Current asset investments at 31 December 2018 consist of cash invested
in SVS Albion OLIM UK Equity Income Fund and is capable of realisation
within 7 days. These fall into the level 1 fair value hierarchy as
defined in note 11.
Trade and other receivables less than one
year 31 December 2018 31 December 2017
GBP'000 GBP'000
------------------------------------------ ---------------- ----------------
Prepayments and accrued income 19 20
Other receivables 5 2
Deferred consideration 640 908
---------------- ----------------
664 930
---------------- ----------------
The Directors consider that the carrying amount of receivables is not
materially different to their fair value.
14. Payables: amounts falling due within one year
31 December 2018 31 December 2017
GBP'000 GBP'000
----------------------------- ----------------- ----------------
Trade payables 6 5
Accruals and deferred income 561 527
567 532
----------------- ----------------
The Directors consider that the carrying amount of payables is not
materially different to their fair value.
15. Called up share capital
Allotted, called up and fully paid GBP'000
------------------------------------------------------------ -------
114,269,311 Ordinary shares of 1 penny each at 31
December 2017 1,143
4,442,278 Ordinary shares of 1 penny each issued during
the year 44
------------------------------------------------------------ -------
118,711,589 Ordinary shares of 1 penny each at 31
December 2018 1,187
------------------------------------------------------------ -------
13,268,070 Ordinary shares of 1 penny each held in
treasury at 31 December 2017 (133)
2,250,400 Ordinary shares purchased during the year
to be held in treasury (23)
------------------------------------------------------------ -------
15,518,470 Ordinary shares of 1 penny each held in
treasury at 31 December 2018 (155)
------------------------------------------------------------ -------
103,193,119 Ordinary shares of 1 penny each in circulation*
at 31 December 2018 1,032
------------------------------------------------------------ -------
* Carrying one vote each
The Company purchased 2,250,400 Ordinary shares (2017: 2,563,000) to be
held in treasury at a cost of GBP1,570,000 including stamp duty (2017:
GBP1,719,000) during the period to 31 December 2018. Total share buy
backs in 2018 represents 1.9 per cent. (2017: 2.5 per cent.) of
called-up share capital.
The Company holds a total of 15,518,470 shares (2017: 13,268,070) in
treasury representing 13.1 per cent. (2017: 11.6 per cent.) of the
issued Ordinary share capital at 31 December 2018.
Under the terms of the Dividend Reinvestment Scheme, the following new
Ordinary shares of nominal value 1 penny each were allotted during the
year:
Number
of
Date of shares Aggregate nominal value of shares Issue price Net invested Opening market price on allotment date
allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
29 June
2018 424,973 4 72.7 296 69.00
31
December
2018 391,272 4 75.9 294 74.00
816,245 8 590
-------- --------------------------------- ------------
During the period to 31 December 2018, the Company issued the following
new Ordinary shares of nominal value 1 penny each under the Albion VCTs
Prospectus Top Up Offers 2017/18:
Number of
Date of shares Aggregate nominal valueof shares Issue price Net consideration received Opening market price on allotment date
allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
31 January
2018 1,815,597 18 73.6 1,303 67.25
5 April
2018 1,541,406 15 73.8 1,109 65.00
11 April
2018 83,144 1 73.0 60 65.00
11 April
2018 7,901 - 73.4 6 65.00
11 April
2018 177,985 2 73.8 128 65.00
--------- -------------------------------- --------------------------
3,626,033 36 2,606
--------- -------------------------------- --------------------------
16. Basic and diluted net asset value per share
31 December 2018 31 December 2017
(pence per share) (pence per share)
--------------------------------------- ----------------- ------------------
Basic and diluted net asset value per
Ordinary share 77.4 71.9
----------------- ------------------
The basic and diluted net asset value per share at the year end is
calculated in accordance with the Articles of Association and is based
upon total shares in issue (less treasury shares) of 103,193,119 at 31
December 2018 (2017: 101,001,241).
17. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares as described in note 15.
The Company is permitted to buy back its own shares for cancellation or
treasury purposes and this is described in more detail in the Chairman's
statement.
The Company's financial instruments comprise equity and loan stock
investments in quoted and unquoted companies, cash balances, receivables
and payables which arise from its operations. The main purpose of these
financial instruments is to generate cash flow and revenue and capital
appreciation for the Company's operations. The Company has no gearing or
other financial liabilities apart from short term payables. The Company
does not use any derivatives for the management of its Balance sheet.
The principal financial risks arising from the Company's operations are:
-- Investment (or market) risk (which comprises investment price and cash
flow interest rate risk);
-- credit risk; and
-- liquidity risk.
The Board regularly reviews and agrees policies for managing each of
these risks. There have been no changes in the nature of the risks that
the Company has faced during the past year, and apart from where noted
below, there have been no changes in the objectives, policies or
processes for managing risks during the past year. The key risks are
summarised below.
Investment risk
As a venture capital trust, it is the Company's specific nature to
evaluate and control the investment risk of its portfolio in quoted and
unquoted investments, details of which are shown on pages 18 to 20 of
the full Annual Report and Financial Statements. Investment risk is the
exposure of the Company to the revaluation and devaluation of
investments. The main driver of investment risk is the operational and
financial performance of the portfolio company and the dynamics of
market quoted comparators. The Manager receives management accounts from
portfolio companies, and members of the investment management team often
sit on the boards of unquoted portfolio companies; this enables the
close identification, monitoring and management of investment risk.
The Manager and the Board formally review investment risk (which
includes market price risk), both at the time of initial investment and
at quarterly Board meetings.
The Board monitors the prices at which sales of investments are made to
ensure that profits to the Company are maximised, and that valuations of
investments retained within the portfolio appear sufficiently prudent
and realistic compared to prices being achieved in the market for sales
of quoted and unquoted investments.
The maximum investment risk as at the Balance sheet date is the value of
the fixed and current asset investment portfolio which is GBP72,658,000
(2017: GBP62,096,000). Fixed and current asset investments form 91 per
cent. of the net asset value as at 31 December 2018 (2017: 85 per
cent.).
More details regarding the classification of fixed and current asset
investments are shown in notes 11 and 13.
Investment price risk
Investment price risk is the risk that the fair value of future
investment cash flows will fluctuate due to factors specific to an
investment instrument or to a market in similar instruments. As a
venture capital trust the Company invests in accordance with the
investment policy set out above. The management of risk within the
venture capital portfolio is addressed through careful investment
selection, by diversification across different industry segments, by
maintaining a wide spread of holdings in terms of financing stage and by
limitation of the size of individual holdings. The Directors monitor the
Manager's compliance with the investment policy, review and agree
policies for managing this risk and monitor the overall level of risk on
the investment portfolio on a regular basis.
Valuations are based on the most appropriate valuation methodology for
an investment within its market, with regard to the financial health of
the investment and the IPEV Guidelines. Details of the industries in
which investments have been made are contained in the Portfolio of
investments section on pages 18 to 20 of the full Annual Report and
Financial Statements and in the Strategic report.
As required under FRS 102 section 34.29, the Board is required to
illustrate by way of a sensitivity analysis the degree of exposure to
market risk. The Board considers that the value of the fixed and current
asset investment portfolio is sensitive to a 10 per cent. change based
on the current economic climate. The impact of a 10 per cent. change has
been selected as this is considered reasonable given the current level
of volatility observed both on a historical basis and future
expectations.
The sensitivity of a 10 per cent. increase or decrease in the valuation
of the fixed and current asset investments (keeping all other variables
constant) would increase or decrease the net asset value and return for
the year by GBP7,266,000 (2017: GBP6,210,000).
Interest rate risk
The Company is exposed to fixed and floating rate interest rate risk on
its financial assets. On the basis of the Company's analysis, it is
estimated that a rise of 1% in all interest rates would have increased
total return before tax for the year by approximately GBP93,000 (2017:
GBP97,000). Furthermore, it is considered that a fall of interest rates
below current levels during the year would have been very unlikely.
The weighted average effective interest rate applied to the Company's
unquoted loan stock during the year was approximately 4.2 per cent.
(2017: 3.6 per cent.). The weighted average period to maturity for the
unquoted loan stock is approximately 2.7 years (2017: 3.3 years).
The Company's financial assets and liabilities, all denominated in
pounds sterling, consist of the following:
31 December 2018 31 December 2017
Floating rate Non-interest bearing Total Floating rate Non-interest bearing Total
Fixed rate GBP'000 GBP'000 GBP'000 GBP'000 Fixed rate GBP'000 GBP'000 GBP'000 GBP'000
------------------
Unquoted equity - - 43,611 43,611 - - 32,338 32,338
Quoted equity - - 799 799 - - 1,106 1,106
Unquoted loan
stock 25,594 - 733 26,327 25,948 - 1,332 27,280
Current asset
investments - - 1,921 1,921 - - 1,372 1,372
Receivables* - - 646 646 - - 911 911
Current
liabilities - - (567) (567) - - (532) (532)
Cash - 7,142 - 7,142 - 10,154 - 10,154
-------------------- ------------- -------------------- -------- -------------------- ------------- -------------------- --------
Total 25,594 7,142 47,143 79,879 25,948 10,154 36,527 72,629
-------------------- ------------- -------------------- -------- -------------------- ------------- -------------------- --------
*The receivables do not reconcile to the Balance sheet as prepayments
are not included in the above table.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument
will fail to discharge an obligation or commitment that it has entered
into with the Company. The Company is exposed to credit risk through its
receivables, investment in unquoted loan stock, and through the holding
of cash on deposit with banks.
The Manager evaluates credit risk on loan stock prior to investment, and
as part of its ongoing monitoring of investments. In doing this, it
takes into account the extent and quality of any security held. For loan
stock investments made prior to 6 April 2018, which account for 98.8 per
cent. of loan stock value, typically loan stock instruments will have a
fixed or floating charge, which may or may not be subordinated, over the
assets of the portfolio company in order to mitigate the gross credit
risk.
The Manager receives management accounts from portfolio companies, and
members of the investment management team sit on the boards of unquoted
portfolio companies; this enables the close identification, monitoring
and management of investment specific credit risk.
The Manager and the Board formally review credit risk (including
receivables) and other risks, both at the time of initial investment and
at quarterly Board meetings.
The Company's total gross credit risk as at 31 December 2018 was limited
to GBP26,327,000 (2017: GBP27,280,000) of unquoted loan stock
instruments, GBP7,142,000 (2017: GBP10,154,000) cash deposits with banks
and GBP664,000 (2017: GBP930,000) of other receivables.
As at the Balance sheet date, the cash held by the Company is held with
Lloyds Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group),
Barclays Bank plc and National Westminster Bank plc. Credit risk on cash
transactions is mitigated by transacting with counterparties that are
regulated entities subject to prudential supervision, with high credit
ratings assigned by international credit-rating agencies.
The Company has an informal policy of limiting counterparty banking and
floating rate note exposure to a maximum of 20 per cent. of net asset
value for any one counterparty.
The credit profile of unquoted loan stock is described under liquidity
risk below.
Liquidity risk
Liquid assets are held as cash on current account, on deposit, in bonds
or short term money market account. Under the terms of its Articles, the
Company has the ability to borrow up to 10 per cent. of its adjusted
capital and reserves of the latest published audited Balance sheet,
which amounts to GBP7,783,000 as at 31 December 2018 (2017:
GBP7,059,000).
The Company has no committed borrowing facilities as at 31 December 2018
(2017: GBPnil). The Company had cash balances of GBP7,142,000 (2017:
GBP10,154,000). The main cash outflows are for new investments, share
buy-backs and dividend payments, which are within the control of the
Company. The Manager formally reviews the cash requirements of the
Company on a monthly basis, and the Board on a quarterly basis as part
of its review of management accounts and forecasts. All the Company's
financial liabilities are short term in nature and total GBP567,000 as
at 31 December 2018 (2017: GBP532,000).
The carrying value of loan stock investments analysed by expected
maturity dates is as follows:
31 December 2018 31 December 2017
Redemption Fully performing Valued below cost Past due Total Fully performing Valued below cost Past due Total
date GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-----------
Less than
one year 6,273 6,443 1,654 14,370 5,621 6,596 1,886 14,103
1-2 years 2,887 - 545 3,432 196 26 845 1,067
2-3 years 684 76 883 1,643 2,869 - 528 3,397
3-5 years 3,046 159 - 3,205 3,762 - 800 4,562
5+ years 3,256 - 421 3,677 3,237 - 914 4,151
---------------- ----------------- -------- -------- ---------------- ----------------- -------- --------
Total 16,146 6,678 3,503 26,327 15,685 6,622 4,973 27,280
---------------- ----------------- -------- -------- ---------------- ----------------- -------- --------
Loan stock can be past due as a result of interest or capital not being
paid in accordance with contractual terms.
The cost of loan stock investments valued below cost is GBP7,284,000
(2017: GBP6,840,000).
In view of the factors identified above, the Board considers that the
Company is subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company's financial assets and liabilities as at 31 December
2018 are stated at fair value as determined by the Directors, with the
exception of receivables and payables and cash which are carried at
amortised cost, in accordance with FRS 102. There are no financial
liabilities other than payables. The Company's financial liabilities are
all non-interest bearing. It is the Directors' opinion that the book
value of the financial liabilities is not materially different to the
fair value and all are payable within one year.
18. Commitments and contingencies
The Company had no financial commitments in respect of investments at 31
December 2018 (2017: nil).
There were no contingent liabilities or guarantees given by the Company
as at 31 December 2018 (2017: nil).
19. Post balance sheet events
Since 31 December 2018 the Company has had the following post balance
sheet events:
-- Investment of GBP400,000 in a new portfolio company, Avora Limited;
-- Investment of GBP200,000 in an existing portfolio company, Beddlestead
Limited;
-- Investment of GBP121,000 in an existing portfolio company, Mirada Medical
Limited; and
-- Investment of GBP104,000 in an existing portfolio company, Convertr Media
Limited.
On 7 January 2019 the Company announced the publication of a prospectus
in relation to an offer for subscription for new Ordinary shares. A
Securities Note, which forms part of the Prospectus, has been sent to
shareholders. The first allotment is expected on 1 April 2019.
20. Related party transactions
During the year, a total of GBP910,000 (2017: GBP1,350,000) was invested
into the SVS Albion OLIM UK Equity Income Fund ("OUEIF"), a fund managed
by OLIM Limited which is part of the Albion Group.
Albion agreed to reduce that proportion of its management fee relating
to the investment in the OUEIF by 0.75 per cent. per annum, which
represents the OUEIF management fee charged by OLIM; this resulted in a
reduction of the management fee of GBP15,000 (2017: GBP3,000).
The Company has entered into an offer agreement relating to the Offers
with the Company's investment manager Albion Capital Group LLP
("Albion"), pursuant to which Albion will receive a fee of 2.5 per cent.
of the gross proceeds of the Offers and out of which Albion will pay the
costs of the Offers, as detailed in the Prospectus.
Other than transactions with the Manager as disclosed in note 5 and that
disclosed above, there are no other related party transactions requiring
disclosure.
21. Other Information
The information set out in this announcement does not constitute the
Company's statutory accounts within the terms of section 434 of the
Companies Act 2006 for the years ended 31 December 2018 and 31 December
2017, and is derived from the statutory accounts for those financial
years, which have been, or in the case of the accounts for the year
ended 31 December 2018, which will be, delivered to the Registrar of
Companies. The Auditor reported on those accounts; the reports were
unqualified and did not contain a statement under s498 (2) or (3) of the
Companies Act 2006.
22. Publication
The full audited Annual Report and Financial Statements are being sent
to shareholders and copies will be made available to the public at the
registered office of the Company, Companies House, the National Storage
Mechanism and also electronically at
https://www.globenewswire.com/Tracker?data=wylr7tf3AVAQnhHkFD1MXmYUss09-hJwJus6kGd72mJ4h0ymxYrlVZvCtyozuYPdPxa2axB2NGefG2FiLp-KZFjRv3FsPSMHu8TN_xRxSHMv6bRXwxTt4y2KCOgcmUBl
www.albion.capital/funds/AATG, where the Report can be accessed as a PDF
document via a link in the 'Financial Reports and Circulars' section.
Attachment
-- Current portfolio sector allocation
https://ml-eu.globenewswire.com/Resource/Download/489a6501-65e0-400d-993b-bb6385184d5d
(END) Dow Jones Newswires
March 22, 2019 12:17 ET (16:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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